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Tuesday, June 30, 2015

Our previous post dealt with an issue - a stadium near UC-SF - which was raised somewhat mysteriously at the last Regents meeting. Now that it is clear what the complaint was, it seems likely that we will hear more about it - at least in the public comments - in July. The other issue that seems likely to be raised (apart from the budget/tuition/pension Committee of Two deal) is the continuing issue of whether UC campuses are adequately handling complaints of sexual harassment. There will surely be some briefing of the Regents on two recent lawsuits - one at Berkeley and the other at UCLA - by women complaining of harassment that was (in their view) improperly dismissed or given inadequate attention by officials. But such briefing is typically done in closed sessions. However, there is always an opportunity for public comment or possibly some scheduled discussion. Links to the two cases are provided below:

At the last Regents meeting during the public comments period, a group (construction unions) favoring a new sports stadium in San Francisco complained about another group that was opposed within UC. But it was unclear who this opposing group was or why - if it existed - it was opposed. That matter is now more clear:

The Golden State Warriors could face some unexpected opposition in their drive to build an arena in Mission Bay: nurses.On Monday, the California Nurses
Association, a union that represents 900 UCSF nurses, came out against
the plan for an 18,500-seat arena across the street from the new UCSF Medical Center on the southern edge of Mission Bay. In a statement, the nurses union cited
“impacts on access to care, patient health and the ability of patients,
family members and health professionals to access Mission Bay’s
hospitals and clinics in gridlock traffic.” ...

Monday, June 29, 2015

The Calpensions.com website has a piece on new accounting standards aimed at retiree health care plans (such as the one operated by UC). Such plans have typically not been pre-funded, unlike pensions. The new standards are intended to display the incremental yearly costs of retiree health care promises. One thing, though, about retiree health care that differs from pensions. UC in particular takes the position that retiree health care is not a legal obligation (unlike pensions) and instead is just a nice thing the university does. But it is something that UC is free to take away. Were there to be pre-funding including an employee contribution, it would be hard to maintain that position, as we have noted in prior posts. How could employees be asked to pre-fund a benefit that was not theirs? Requiring an employee contribution would seem to create a legal obligation.

If you scroll down the Calpensions article, hiding towards the bottom you will find:

...Last January Gov. Brown proposed a long-term plan to cut costs. State
worker retiree health care would be shifted from “pay-as-you-go”
funding, which only pays the health insurance premiums each year, to
pension-like “prefunding” that invests additional money to earn
interest. State workers would contribute half of the normal cost of the plan,
work longer to qualify for full retiree health care, receive a subsidy
no higher than active workers, have the option of a lower-cost health
plan, and face tighter dependent eligibility and Medicare switch
reviews. The plan must be bargained with unions. An incentive for unions might
be that agreeing to the plan would strengthen the “vested right” to
retiree health care, which some think may not have the legal protection
currently given to pensions...

Inside Higher Ed has a lengthy article on a lawsuit against the U of Texas regarding its affirmative action policies. Apparently, the U.S. Supreme Court has just announced it will take up the case with a likely decision in 2016. The issue might seem to have no potential effect on UC since it is banned from using such practices under Prop 209 of 1996. Prop 209 was enacted by voters after the Regents adopted an anti-affirmative action policy favored by then-Gov. Pete Wilson. (The Regents rescinded the policy after 209 was passed since it had become redundant.)

There could be an effect in California, however, were 209 to be repealed or modified. The legislature nearly put a proposition on the ballot that would have allowed the voters to repeal 209. But after protests from the Asian community, there were not enough votes for such an action and the matter was dropped. It is possible, however, that the issue of a repeal proposition could come up again. The meaning of such a repeal, were it ever to occur, would be constrained by whatever the Supreme Court might say in the Texas case.

Friday, June 26, 2015

Yesterday, we posted UC prez Napolitano sunny explanation of
her Committee of Two deal on the UC pension. A somewhat more nuanced exposition appears in the Sacramento Bee.* We’ll come back to the Bee
article below but first it’s important to understand the PEPRA** cap and its
effect on new hires if the Committee of Two deal is put into operation.

The cap
is $117,020. But that cap isn’t just a limit on the top pension that can be
paid under the PEPRA methodology. It is also the top amount of pay that can be used in the pension calculation. CalPERS
is now under PEPRA and here is CalPERS' explanation:

============================

Pensionable Compensation Cap: Caps
the annual salary that can be used to calculate final compensation for all new members.***

============================

Many faculty who are paid more than the cap amount under the
current pension would not receive a pension more
than $117,020 in any case. Let's take a simple example. If you earned double the cap as your highest pay under the
current plan, but had worked 20 or fewer years at UC and had a 2.5 age factor, your
basic pension would be 50% of your highest pay. (20 x 2.5 = 50) So with 20
years or fewer, a simple cap of $117,020 on earnings wouldn’t affect your pension using
the current formula.

But under PEPRA, the limit is not a simple cap on the payout. The cap is on the earnings used
for the formula. So only half your salary, if you earned twice the PEPRA cap, would be used in the calculation. Your
pension with 20 years of service and earnings twice the PEPRA cap would be one
fourth your earnings instead of one half. Again, the key point is that, as
the CalPERS explanation says, the cap is on formula earnings, not on pension
payout. Lots of faculty would have pay above the PEPRA cap and would be
affected by the cut; the impact would not be limited just to eventual retirees with
super-long service to UC. Any new hire earning more than the PEPRA cap would be affected, even if he/she would not have received more than $117,020 as a pension under the current formula. [Did the UC prez fully understand the cap and what it entailed?]

Cutting a pension benefit in half, as in our example above,
is a Big Deal, even if it's just for new hires (who over time will become a larger
and large share of the system). Creating some kind of alternative system that
compensates the new hires for the cut is not a simple matter (and will eat up the “saving”
caused by the cap). Napolitano promised in her sunny explanation that everyone
would be consulted in the design of the new program. But will everyone want to
go along? From that Bee article:

…AFSCME Local 3299, which represents
custodians, cooks, bus drivers and other UC workers, has long pushed for a more
modest pension cap. Spokesman Todd Stenhouse criticized the potential
alternatives for higher-paid employees, which he said would undermine intended
savings that could be used elsewhere at the university. “If you’re simply going to just take the money out of your right
pocket and put it into the same place, does it really solve the problem?” he
said…

Thursday, June 25, 2015

We earlier blogged about the "microaggression" debate at UC.* Yesterday, the issue was debated on "Airtalk" with Larry Mantle by UCLA Law Prof. Eugene Volokh and Prof. Derald W. Sue at Teachers College at Columbia University. You can hear the program at the link below. A somewhat-related take by yours truly is on another blog.** I suspect that this matter will come up at the July Regents meeting when there will be a debate on an anti-Semitism resolution. As we have noted earlier, UC prez Napolitano said an an NPR broadcast that she personally endorsed the resolution.*** Recently, a state legislative commitee endorsed a less-specific version which Regent Pérez appears to endorse.****

Californians, I regret to inform you that your diploma is being held up. You won’t be able to graduate.

You flunked higher education.

Another state budget, accompanied by an eight-month-long controversy
over the University of California, demonstrated once again that we
Californians don’t have a clue about what our public universities mean
to the state. Because if we did, we wouldn’t make them beg us for the
money needed to educate more of our children.

Instead, Californians—from our leaders in Sacramento to average
voters—think that the UC and California State University systems are too
costly and administratively bloated. That tuition is being raised to
cover academic nonsense. And that taxpayers already give too much money
to higher education. These claims are either nonsense—or the fault of
Californians themselves, not the universities...

I am happy to share with you that Governor Brown has signed a final State budget that includes significant increased support for the University consistent with the multi-year funding framework agreement reached earlier between UC and the State. We’ve come a long way since the release of the Governor’s preliminary budget in January, and with this final 2015-16 budget UC enters an era of increased State funding and financial stability that we all can celebrate.

One of the important outcomes of this funding agreement is that it allows us to budget for annual pay increases for faculty and non-represented staff over the next several years. All employees deserve to be appropriately compensated and our pay practices for many of our talented faculty and non-represented staff employees have lagged the market in recent years. The additional funds we will receive under the budget agreement will also allow us to make merit-based pay a more regular com­ponent of our systemwide salary programs to help recognize the contributions of our deserving employees.

The funding agreement also allows us to reduce our unfunded pension liability, which helps to ensure the long-term fiscal solvency of the UC Retirement Plan. Additionally,undergraduate resident tuition will be held at current levels for the next two years with moderate increases pegged generally to the rate of inflation beginning in 2017-18, giving students and their families predictable tuition information so they can accurately plan for the cost of a UC education.

In exchange for increased State funding for the University’s pension plan, the Governor is requiring UC to implement by July 1, 2016, a new category (“tier”) of retirement benefits for future UC employees that aligns pension-eligible UC employee pay with that of State employees. I want to be sure everyone understands the following facts about this new UC pension tier:

-- Pension benefits for current faculty and staff are not affected. This new pension tier will apply only to future employees hired after it is implemented, which is currently scheduled for July 1, 2016. There will be no changes to your pension benefits – accrued pension benefits are protected by law and cannot be reduced or revoked.

-- Details to be developed. The specific design of the new tier hasn’t been decided and will be developed over the coming months. In general, the new tier is expected to include the option of a new traditional defined benefit pension plan with a pension-eligible salary limit up to the California Public Employees’ Pension Reform Act of 2013 (PEPRA) cap (currently $117,020); a defined contri­bution plan such as a 403(b); or a combination of the two.

-- Faculty and staff will help shape the new tier. The design of the new tier will be informed and guided by input from members of the UC community, including Regents, faculty, staff, and other stakeholders, as well as an advisory UC task force that will include faculty and staff.

-- Unions will help determine choices for their members. As with previous pension reforms, application of the new tier to union-represented employees will be subject to collective bargaining, and union leaders will help determine their members’ choices.

We will keep everyone informed about the development and details of the new tier as we move through this process.

This is a bright day for UC, and I want to again thank the scores of faculty and staff who helped advocate for our funding needs. You have been instrumental in helping to bring about this historic agreement and I deeply appreciate your partnership.

Yours very truly,Janet NapolitanoPresident
-----------Scroll down to our previous post (towards the bottom). And while you're doing it, click below:

Wednesday, June 24, 2015

There were no surprises for UC in the budget signed by Gov.
Brown today relative to previous information. The governor made minor vetoes,
none affecting UC. However, the $25 million for UC contingent on adding 5,000
students is explicit. In contrast, as noted in a prior posting, UC prez
Napolitano interprets the budget to mean UC can discuss with the legislature
exactly what the provision means. The
language related to UC is on pp. 21-22 of the budget document.*

As noted in prior posts, budget accounting is now
complicated by the fact that some revenue is taken off the top and diverted by
formula to the rainy-day fund. So there are two reserves: the regular reserve
in the general fund and the rainy-day fund. It’s best to combine the two into
total reserves and add back the revenue diverted to the rainy-day fund into
total revenue. (Revenue shown below is actually revenue and “transfers,” a mischievous
category that adds a minor distortion.)

Let’s first review what happened in the 2014-15 year that is
soon to end.Reserves at the beginning
of that year (7/1/14) and the end (6/30/15) were estimated at various points of time:
($millions)

Fiscal 2014-15BeginningEndingDeficit

---------------------------------------------------------

Enactment of 2014-15 budget: $3,903$3,010-$893

January 2015 budget message: $5,100$3,029-$2,071

May Revise 2015 message: $5,589$3,965-$1,624

Enactment of 2015-16 budget: $5,589$4,029-$1,560

---------------------------------------------------------

While it
may be a surprise to some, readers of this blog will have known all along that
the current fiscal year (2014-15) was always estimated to be in deficit,
although the amount varied.

In
contrast, the 2015-16 budget just enacted was always planned to be in surplus.
The chart below shows the revenue and spending estimates for the current year
and next year:

$millionsFY2014-15FY2015-16

---------------------------------------------

Beginning reserves: $5,589 $4,029

Revenues: +$112,913+$116,887

Expenditures: -$114,473 -$115,369

Total
deficit/surplus: -$1,560+$1,518

Ending reserves: $4,029$5,547

---------------------------------------------

The ratio
of end-reserves to spending rises from 3.5% for the current year to 4.8% for
next year. The volatile personal income tax accounts for almost two thirds of total revenue. As has been pointed out in prior posts, such levels of reserves
provide little cushion for an unexpected downturn. We have also pointed out in
prior posts that there is a problematic pension deal embedded in the budget and
the multi-year features of that deal seemed to be contradicted by legislative
language that denies any obligation for UC pension funding beyond 2015-16. Note: It appears that the final budget language dropped the explicit language ruling out a future commitment to the pension. The language passed allocates one-year's worth of funding but makes no future commitment for the rest of what was promised as part of the Committee of Two deal. No mention of the future is better than explicitly stating that there is no future obligation. But it still lacks any future commitment.** [SEE CORRECTION BELOW]

An act making appropriations for the support of the
government of the State of California and for several public purposes in
accordance with the provisions of Section 12 of Article IV of the Constitution
of the State of California, relating to the state budget, to take effect
immediately, budget bill.

6440-004-0001—For support of
University of California ........................

96,000,000

Schedule:

(1)

5440-Support
........................

96,000,000

Provisions:

1.

The funds appropriated in this
item shall be released to the University of California only upon
certification by the Director of Finance that the Regents of the University
of California have approved a retirement program that limits pensionable
compensation consistent with the limits specified in the Public Employees’
Pension Reform Act of 2013.

CORRECTION: IT HAS BEEN BROUGHT TO MY ATTENTION THAT ANOTHER COMPANION BILL - SB 97 - STILL CARRIES THE OBJECTIONABLE LANGUAGE WHICH RETURNS US TO THE ORIGINAL PROBLEM OF A ONE-YEAR ALLOCATION AND AN EXPLICIT STATEMENT THAT THERE IS NO FURTHER OBLIGATION:

SEC. 85.

Item 6440-004-0001 of Section 2.00 of the Budget Act of 2015 is amended to read:

6440-004-0001—For support of University of California
........................

96,000,000

Schedule:

(1)

5440-Support
........................

96,000,000

Provisions:

1.

The
funds appropriated in this item shall be released to the University of
California only upon certification by the Director of Finance that the
Regents of the University of California have approved a retirement
program that limits pensionable compensation consistent with the limits
specified in the Public Employees’ Pension Reform Act of 2013.

2.

The
funds appropriated in this item shall be used only for unfunded
liabilities of the University of California Retirement Plan, in excess
of current base amounts, to satisfy the
requirements of clause (ii) of subparagraph (B) of paragraph (1)
of subdivision (b) of Section 20 of Article XVI of the Constitution of
the State of California.

3.

Upon
release of the funds, the Regents of the University of California shall
submit a report to the Director of Finance and, in conformity with
Section 9795 of the Government Code, to the Legislature demonstrating
that the funds have been used to supplement and not supplant funding
otherwise available to pay for unfunded liabilities of the University of
California Retirement Plan.

4.

This
appropriation does not constitute an obligation on behalf of the state
to appropriate any additional funds in subsequent years for any costs of
the University of California Retirement Plan. The Legislature shall
determine the amount of additional funds, if any, to be appropriated in
subsequent years for costs of the University of California Retirement
Plan.

LA Times sports columnist Bill Plaschke raises some unpleasant thoughts about the recent football-related confrontation at UCLA involving singer "P Diddy" and his son.* Plaschke points to other recent football-related issues at UCLA and suggests that nowadays, they may be inherent in big time college football. We have posted about other legal challenges currently in the mill regarding collegiate sports that have as their theme that the major sports are essentially commercial ventures and that the athletes are quasi-employees, even if not treated as such. And, of course, there is now concern about football concussions.** From the Plaschke column:

...All these crooked roads led to Monday's events in the school's weight room, where the Bruins suffered through the perfect storm of an overbearing parent [Diddy], a marginal athlete [his son], and a law-and-order coaching staff. While the legal system will decide the fault here — a yet-unreleased surveillance tape is key — there will remain larger questions that only [UCLA football coach] Mora can answer.

How can a parent, even one as rich and influential as Sean "Diddy" Combs, feel so empowered he would bypass the head coach's office and enter one of the team's sanctums and demand to talk to an assistant coach? Are the monetary and recruiting benefits of a parent such as Combs really worth the roster spot that his undersized son Justin requires and the access that Combs demands? If Mora truly wants to build a championship program with hard work, commitment and discipline, are these really the kind of glamour deals he wants to be making? ...

Monday, June 22, 2015

P. Diddy has been arrested for allegedly getting into a fight with a football coach at UCLA ... where his son is on the team, TMZ Sports has learned... Diddy is still in custody at campus jail... Sources connected with Diddy tells us the rap mogul is adamant he acted in SELF DEFENSE and was not the aggressor.

It's quite possible to look at the design on the right and see what isn't there. Is there really a downward pointing triangle, for example? Or an upward pointing triangle?

An email from UC prez Napolitano analyzes the legislature's budget for 2015-16 as follows:

...By adopting the provisions of
the funding framework agreed to by the Governor and the University, the
budget approved by the Legislature puts UC in a strong financial
position that provides the University with predictable and stable
support for the next four years and offers students and their families
the certainty to confidently budget for the costs of a UC education.

The
budget agreement also provides $25 million for undergraduate resident
enrollment growth at UC. This funding could be a substantial first step
toward achieving UC’s goal of enrolling almost 10,000 new California
undergraduate and graduate students over four years,
beginning in the 2016-17 academic year. We are grateful that the
Legislature and the Governor share our goal of enrolling more California
students. We look forward to analyzing the
provisions accompanying this funding over the coming months and
continuing conversations with the Legislature and the Governor about
enrollment growth...

We can all understand the ambiguity of the second paragraph since the legislature's understanding of when the enrollment growth might occur or can occur seems to be different from UC's. So maybe the discrepancy can be worked out if it can be said that conversations are "continuing." On the other hand, the pension piece of the Committee of Two deal involved a multi-year commitment of state funds for the UC pension in exchange for certain changes we have discussed in prior posts. But what the legislature proposes is a one-year contribution with an explicit statement that the rest of the money in the future is not obligated and may not appear. It also indicates that despite the lack of commitment of future funding, UC should quickly (hastily?) develop pension changes and put them into effect before even the first year's money will flow. That is not the "funding framework" of the Committee of Two.

It takes a great act of will to see a multi-year deal when it's not being provided. Guess you just have to believe:

We have previously blogged about a potential ballot initiative that would bar anything but defined contribution pensions after 2019. The proponents evidently had the $200 to file it but are hoping some wealthy sugar daddy or daddies will come along to finance a campaign to a) get the needed signatures for putting it on the 2016 ballot and b) then finance a campaign to get voters to support it.* Such an initiative would further complicate the pension challenges for UC created by the Committee of Two deal which would likely produce some kind of hybrid plan. So far, no one has reported anything about sugar daddies that might have appeared. But it is evident that if the proposition got on the ballot, the opposition campaign would largely be financed by public sector unions.

One complication is that unions may have other ballot items to promote or oppose and there is a limit to how much they will want to spend in 2016. There may be some taxes on the ballot that will likely attract union financial support. Example:

Hoping to influence a special health care budget session, a coalition
of labor and medical groups has put $2 million into an initiative to
raise California’s tobacco tax and use the revenue to fund health care
for low-income Californians. The money flowed from a coalition of
groups that include SEIU California State Council – a union umbrella
group whose members include thousands of health care workers – the
California Medical Association, the California Dental Association, the
American Cancer Society and groups promoting heart and lung health. Their twin ballot initiatives would
impose a $2-per-pack tax on cigarettes to fund health programs that
include smoking prevention and Medi-Cal, California’s health insurance
program for low-income residents...

Sunday, June 21, 2015

UCLA offensive line coach Adrian Klemm has been reinstated by the university. Klemm was suspended for alleged NCAA violations. The review continues but Klemm is being allowed to resume his duties as the offensive line coach. Klemm
has been an assistant at UCLA for the past three seasons and is also
one of the school's top three recruiters and has rebuilt the Bruins'
offensive line. He missed spring ball and was not allowed to recruit after being suspended in March. A
person familiar with the situation said Klemm's only likely punishment
will be the time he has already missed, including spring practice. UCLA said they will refrain from comment to "protect the integrity of the ongoing process."

UCLA football offensive line coach Adrian Klemm was reinstated to the
team Friday, according to the Los Angeles Times. Klemm was suspended
from the team on March 16 because of alleged NCAA rules violations and
missed the entirety of the team’s spring practice. While Klemm is allowed to the return to the team, the review of his
alleged violations is ongoing. It remains unclear as to what specific
transgressions led to Klemm’s suspension, details that will be released
following the review’s close, according to UCLA Athletics.* Klemm had been a member of the Bruins coaching staff for three
seasons before his suspension. During his tenure, Klemm has helped UCLA
to a 29-8 record, including back-to-back 10-3 seasons.

The Committee of Two deal requires major and adverse changes to the UC pension plan because its features differ from those of other state plans. Apparently, the contradiction cannot be tolerated by Gov. Brown. But when it comes to high-speed rail, a major funding source of which is the state's cap-and-trade program, complete contradiction is possible. See above.

"A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines." [Emerson]

Apparently, it's OK to have a little mind and be a little statesman in the pension category but not for rail.

Friday, June 19, 2015

The Legislative Analyst's Office (LAO) has come out with summaries of the state budget prior to any line-item vetoes by the governor. Since the governor has a deal with the legislature, it is unlikely that there will be significant vetoes but we will wait to see. In the current year, reserves were falling, i.e., a deficit in common parlance (but not necessarily in Sacramento-speak). However, in the coming year (2015-16), total reserves (regular plus rainy day) are projected to rise, i.e., a surplus.

The LAO summarizes the UC budget for 2015-6 as follows:

$3.2 Billion General Fund Support for UC. This
is an increase of $241 million (8 percent) from 2014-15. Of this
increase, $119 million is ongoing and $122 million is one time. The bulk
of the ongoing funding is unallocated, but the budget includes various
earmarks for the remaining funds. Specifically, the budget earmarks (1)
$96 million (one time) to supplement payments made by UC toward its
unfunded pension liability (this is counted as a Proposition 2 debt
payment),* (2) $25 million (one time) for deferred maintenance (provided
through a budget control section), (3) $6 million (ongoing) to support
two UC centers on labor research and education, (4) $1 million (one
time) for the Wildlife Health Center at the Davis campus to administer
grants to local marine mammal stranding networks, (5) up to $1 million
for UC to continue planning a medical school at the Merced campus, and
(6) $770,000 (ongoing) for an elections database housed at the Berkeley
campus. In addition, the budget specifies funding is available from UC’s
base budget for the California DREAM Loan Program, though it does not
designate a set dollar amount for this purpose.

Because revenue is now diverted to the rainy day fund under Prop 2, some adjustments have been made to the figures below for 2015-16 including adding back an "encumbrance" of $971 million:

($ billions)

Reserves at start of year: $4.0Revenue and transfersincluding received byrainy day fund +$116.9

Expenditures -$115.4

Surplus +$1.5

Reserves at end of year $5.5

As we have noted in prior posts, at the end of the year total reserves would be less than 5% of the budget which could be eaten up quickly in any kind of downturn.

Source: http://www.lao.ca.gov/Publications/Report/3279
---
*This blog has previously noted that the language in the budget is not in accord with the Committee of Two accord which promises a multi-year inflow into the UC pension. Instead, there is a one-time allocation only for the first year with language - unless it has been changed - saying there is no guarantee of future contributions. The quid pro quo for the multi-year deal was creating a Tier 3 in the pension with a cap that will require substantial reworking of the pension program. Without even the quid pro quo, it is very difficult to see how UC benefits. See http://uclafacultyassociation.blogspot.com/2015/06/unbalanced-pension-deal.html

Dozens of UCLA student-athletes will
participate in research by UCLA scientists that is expected to deliver
new clues about the biological and genetic risk factors for
sports-related concussions. UCLA researchers in medicine and athletics have outfitted 22 Bruin
football players with helmet sensors that measure the speed, intensity
and location of hits to the head during all games and practices. The
scientists also will track the health of 40 men’s and women’s soccer
players. The information they gather could shed light on why concussions
strike some athletes more than others, and why certain people recover
faster from head injury. The innovative studies are part of the Concussion Assessment Research and Education Grand Alliance,
a landmark $30 million initiative funded by the National Collegiate
Athletic Association and the U.S. Department of Defense to collect “big
data” on concussions. The three-year project aims to fill critical gaps
in knowledge about concussion and translate research findings into new
safety guidelines for the more than 450,000 U.S. collegiate
student-athletes...

Football players in the study will wear helmets outfitted with sensors
that measure the impact of collisions they sustain on the field. The
sophisticated gadgets wirelessly transmit data to a laptop for analysis,
and pagers connected to the helmets alert medical staff to what could
be a significant hit...

Thursday, June 18, 2015

Bob Samuels pointed me to a link to the current state budget language.* That's not the same as the overall budget summary - which will eventually be published by the Dept. of Finance (once the governor has signed off) that gives you an overall view of inflows and outflows and reserves.

However, it is worth noting that there is a certain imbalance when it comes to pensions. The overall UC language appears on pages 105-113 and the pension language in particular is on pages 112-113. The pension language requires the UC pension to implement what amounts to a Tier 3 with a cap at the same level as other state plans.** If implemented, as we have explained in earlier postings, it will require UC to create a hybrid defined-benefit/defined contribution plan. That's a BIG DEAL and a BAD THING by itself. It is being done because of appearances presumably since it doesn't look good for UC to do its pension differently from CalPERS (and therefore CSU). In exchange for the bad thing, the arrangement negotiated by the Committee of Two is supposed to be that UC gets a series of pension contributions from the state over three years.*** But the appropriation in the bill a) is for one year only and specifically notes that there is no obligation by the legislature to honor the rest of the deal or make any future contributions thereafter. Therefore, the bill implicitly continues to proclaim that the UC pension is not the liability of the state.

Here is the language:

This appropriation does not constitute an obligation on behalf of the state to appropriate any additional funds in subsequent years for any costs of the University of California Retirement Plan. The Legislature shall determine the amount of additional funds, if any to be appropriated in subsequent years for costs of the University of California Retirement Plan.

Note the asymmetry: It looks bad for UC to have different rules from the plan covering CSU so UC should change its rules for appearances' sake. But apparently it doesn't look bad for the state to be obligated to make whatever future contributions are needed for CalPERS (CSU), but not have that same obligation for UC. Sure seems like a lack of balance. And one might argue that in fact even the limited Committee of Two accord is not properly reflected in the budget bill since the future pension payments promised by the governor are not reflected as any kind of legislative obligation - quite the contrary. Sure seems like bad faith.
---
*http://www.leginfo.ca.gov/pub/15-16/bill/asm/ab_0101-0150/ab_123_bill_20150616_amended_sen_v98.pdf
**UC created a Tier 2 to cut pension costs before the state acted on its own programs.
***There are supposed to be three annual payments which will total $436 million. But the bill appropriates only $96 million for one year. See http://www.universityofcalifornia.edu/press-room/uc-press-release-governors-revised-budget

We have previously noted that President Obama would be on the Westside (and elsewhere) today and tomorrow. More details:

The Los Angeles Police Department issued a list of areas to avoid today and Friday because of President Barack Obama’s visit.The following areas should be avoided between 1-6 p.m. today:-- Evans Road and Monorca Drive; and-- Napoli Drive and Sunset Boulevard.The following areas should be avoided between 2-3 p.m. today:-- Sepulveda Boulevard between Lincoln Boulevard and Century Boulevard;-- Pico Boulevard and 23rd Street; and-- Barrington Avenue and Palms Boulevard.The following areas should be avoided between 2-4 p.m. today:-- Centinela Avenue and Bundy Avenue;-- Bundy Avenue and the Santa Monica (10) Freeway; and-- San Diego (405) Freeway and Sunset BoulevardThe following areas should be avoided between 3-6 p.m. today:-- Sunset Boulevard and the San Diego Freeway;-- San Diego Freeway and Mulholland Drive; and-- Mulholland Drive and Coldwater Canyon Drive.The following areas should be avoided between 5-8:30 p.m. today:-- Coldwater Canyon Drive and Beverly Drive;-- Beverly Drive and Sunset Boulevard; and-- Wilshire Boulevard and Santa Monica Boulevard .The following areas should be avoided between 8-11 a.m. today:-- Wilshire Boulevard and Santa Monica Boulevard;-- Santa Monica Boulevard and Century Park East;-- Century Park East and Pico Boulevard;-- Pico Boulevard and Overland Avenue;-- Overland Avenue and National Boulevard;-- National Boulevard and Santa Monica Freeway; and-- San Diego Freeway and Centinela Avenue.The following areas should be avoided between 8 a.m.-noon Friday:-- Arroyo Boulevard and Mountain Street;-- Mountain Street and the Foothill (210) Freeway;-- Ventura (134) Freeway and Colorado Boulevard; and-- Colorado Boulevard and Figueroa Street.The following areas should be avoided between 9 a.m.-noon Friday:-- York Boulevard and Avenue 51; and-- Yosemite Drive and Avenue 56.The following streets in Pasadena will be closed from 7 a.m. to 2 p.m. Friday:-- Seco Street between West Drive and Lincoln Avenue;-- Rosemont Avenue between West Drive and Lincoln Avenue;-- Rosemount Avenue between Prospect Terrace and North Arroyo Boulevard;-- West Drive between Linda Vista Avenue to Salvia Canyon Road; and-- Rosemount Avenue between North Arroyo Boulevard and Seco Street.Merv
Griffin Way between Wilshire Boulevard and Santa Monica Boulevard in
Beverly Hills will be closed from 2 p.m. today to noon Friday.

Readers of this blog may be waiting for an analysis of the new state budget and wondering why we haven't presented one. The answer is simple. No budget publication or summary has yet appeared from the governor, the legislature, the Dept. of Finance, or any official source. So apart from fuzzy news accounts, we don't have any real numbers to analyze.

Wednesday, June 17, 2015

From time to time, we remind readers of email frauds including "phishing" attacks specifically aimed at UCLA. If you get an email, supposedly from UCLA, saying you somehow have to renew or reactivate your email account, delete it. Do not click on any link provided.

Apparently, there is a current phishing attack against UCLA. Here is a notice I received from the folks who run the Anderson system:

The UCLA IT Security Office has reported that there is a new phishing
email that has been making its way across campus. Apparently, it
originated from a legitimate UCLA email account that had been
compromised. If anyone has received
a message like the one posted at the end of this notice, please just
delete it. If anyone actually followed the link in the original email
and entered his/her credentials on its website, he/she should consider their
credentials compromised and must change them.

The phony phishing email in question below has all the hallmarks of fraud including strange English since the attacks are often of foreign origin. "Current" is capitalized. No space between 24 and hours The first two sentences are separated by a comma. "...loose access to your account soon as..." Etc.

UCLA;Your Current password will expire in the next 24hours , you are here by directed to kindly click on Sign in to kindly reset your password or you will loose access to your account soon as your password expires.NOTE: Your login will time out after 60 minutes. Your responses will be lost if you do not click on the "Sign in" button before 60 minutes lapses. There is no prompt when your 60 minute session has expired. Please save extensive comments periodically and check your time.

Blog readers will have to wait a bit until we get an actual budget document outlining the deal between the governor and the legislature. But what is clear is that there really wasn't a negotiation. Instead, there was a choreographed arrangement in which the legislative leaders could display (without much documentation) a kind of wishlist budget and then largely concede to the governor what he wanted. Real negotiations don't end in a day and typically end close to the deadline (which in this case would have been June 30).

That said, UC prez Napolitano can't be happy with this tidbit in the news media:

...The
budget is a time for payback. As part of the final accord, the
California State University system received an additional bump of $97
million in ongoing funding. UC received a one-time
payment of $96 million to pay down its pension liability.In a news conference with (legislative leaders) de León and Atkins on Tuesday,
Brown dryly noted that the Cal States did somewhat better in this
year’s budget than UC. UC President Janet Napolitano was public in
her demands for more money. CSU Chancellor Timothy White took a more
low-key approach...

Tuesday, June 16, 2015

We posted about President Obama's coming Westside fundraising activities a couple of weeks ago. Now the date - June 18 - is approaching so there may well be commuting issues for UCLA. And there will likely be traffic issues on the following day, too, due to the President's departure and the arrival of his would-be successor, Hillary Clinton, for fundraising. From the Beverly Hills Courier:

Southland motorists should begin preparing for some late-week traffic
headaches, with President Barack Obama scheduled to visit the area for a
pair of Thursday fundraisers. Obama is scheduled to arrive at Los Angeles International Airport at
2:20 p.m. Thursday, just in time for the evening rush hour. Obama is
expected to attend a pair of Democratic National Committee fundraisers —
a roundtable discussion hosted by producer/director Chuck Lorre in
Pacific Palisades and a reception/dinner at the Beverly Hills home of
filmmaker Tyler Perry. Although specific details about the president’s travel plans are
never released, motorists in the West Los Angeles, Pacific Palisades and
Beverly Hills areas can likely expect sporadic road closures as the
president’s motorcade moves through the area. Obama typically gets to
and from the airport via helicopter, but is still driven on city streets
to reach his ultimate destination. Obama is scheduled to spend the night in the Southland, then return
to LAX for an 11:40 a.m. Friday departure to San Francisco, where he
will attend more fundraisers and speak at the annual meeting of the U.S.
Conference of Mayors. The president’s departure on Friday won’t end the traffic issues.
Some additional disruptions will likely be caused that day thanks to
presidential hopeful and former Secretary of State Hillary Rodham
Clinton, who will also be in town for a series of fundraisers. She is expected to attend a luncheon event at the home of Westfield
Corp. co-CEO Peter Lowy and his wife Janine; a late-afternoon event the
home of HBO executive Michael Lombardo and husband Sonny Ward; and an
evening event at the home of actor Tobey Maguire and his wife Jennifer
Meyer, according to Variety.

As we have noted in prior blog posts, the legislature
enacted a budget for 2015-16 based on revenue estimates which exceed those put
forward by the governor in his May Revise. Other than news accounts, however,
there seem to be no analyses or summaries of the legislature’s budget on the
web. News accounts put total spending in that budget at $117.5 billion in
contrast to the governor’s $115.3 billion. One suspects that most legislators
did not have much more detail than that when they voted since you can’t find
the budget (or I couldn’t) on the assembly or senate websites or the
Legislative Analyst’s website or the Dept. of Finance website. (You must be
shocked, shocked…) One GOP legislator accidentally voted for the budget because
he was doing Facebook and wasn’t paying attention.*

However, what is striking about the budget isn’t so much
what may happen next fiscal year but what happened this year. Below is a table showing
the evolution of this year’s General Fund budget (2014-15) and projected
2015-16. Spending for this year rose relative to what was projected last June
by about $6.5 billion or 6%. Prop 98 spending on K-14 absorbed $5.1 billion and
total reserves (regular plus rainy day) rose by $1 billion over the course of
the year – at least as seen in May. One thing you should come away with is that
the variance in the UC budget – despite the drama of the confrontation with the
governor over the increment in the university budget – is a flea on the back of an elephant compared with everything else.